ARISE Technologies Reports Second Quarter Results

Revenues increase by 131% as shipments rise by more than 300%

On July 15, 2010, ARISE issued a release commenting on preliminary first-quarter results. The release is available at www.sedar.com or www.arisetech.com

WATERLOO, ON, Aug. 4 /CNW/ - ARISE Technologies Corporation (TSX: APV and Frankfurt: A3T), which is a leader in high-performance, high-quality, cost-effective solar technology, today reported its financial results for the second quarter ended June 30, 2010. Financial results conform to Canadian generally accepted accounting principles ("GAAP") and all currency amounts are in Canadian dollars unless otherwise noted.

Q2 2010 Highlights:

    
    -  Total revenue of $15.3 million, compared with $6.6 million in Q2 2009

    -  Net loss of $7.4 million, compared with a net loss of $13.6 million
       in Q2 2009

    -  Shipped 11.8 MW of PV cells, an increase of 312% from 2.9 MW
       in Q2 2009

    -  Completed $11.5 million brokered offering

    -  Systems division signed joint venture agreement with Sky Solar
    

"We continued to report improvements across key areas of our business during the second quarter with significant year-over-year increases in revenue and PV cell shipments," said Vern Heinrichs, President and CEO of ARISE. "Customer demand remains strong in both Europe and Ontario, and demand for our products is currently outpacing the available supply. Line two at our German plant is now running at full capacity, bringing our annual production capabilities to 85MW. We expect the strong demand to continue throughout the second half of 2010 and are in the early stages of planning lines three and four."

"In Ontario, we continued to make strides in advancing the progress of our Systems division. This quarter, for the first time, the systems division generated more than $1 million in revenue from its operations in the Ontario market," added Mr. Heinrichs. "During the quarter, we signed a joint-venture agreement with Sky Solar whose European headquarters are in Neurnberg, Germany, to provide engineering, procurement and contracting services for ARISE and Sky Solar projects in Ontario. This agreement is significant because it provides ARISE with access to the project finance, engineering and construction expertise of Sky Solar, a multi-national enterprise with considerable experience in the PV solar market."

Financial Overview

Sales for the quarter ended June 30, 2010 amounted to $15.3 million, compared with $6.6 million in the second quarter of 2009. PV cells accounted for 93% of Q2 2010 sales with the balance being generated by the Company's Systems Division.

Gross loss for the three months ended June 30, 2010 was $0.5 million, compared with a loss of $8.1 million for the same period in 2009.

Operating expenses for the second quarter of 2010 were $7.1 million, an increase of 24.3% from $5.7 million for the quarter ended June 30, 2009.

R&D expenses decreased by 40% for the second quarter of 2010 to $1.5 million from $2.6 million for the three months ended June 30, 2009.

General and administrative ("G&A") expenses increased to $4.5 million, from $2.3 million in the second quarter of 2009. The 96% increase was predominately the result of increased stock-based compensation related to the issuance of stock options, deferred share units, and warrants on a bridge loan in the second quarter of 2010.

Selling and marketing expenses for the quarter ended June 30, 2010 were $0.5 million, compared with $0.4 million in the second quarter of 2009.

Net interest expense for the second quarter of 2010 was $0.8 million, up slightly from $0.6 million for the same period the prior year.

Other income and expenses for the quarter ended June 30, 2010, included a foreign exchange gain of $1.9 million, compared with a foreign exchange gain of $0.6 million for the second quarter of 2009.

Liquidity and Capital Resources

As at June 30, 2010, the Company had a working capital deficiency of $34.8 million consisting of current assets of $24.0 million less current liabilities of $58.8 million. This compares with negative working capital at December 31, 2009 of $44.0 million consisting of current assets of $24.2 million less current liabilities of $68.2 million. The decrease in working capital deficiency reflects cash raised from the issuance of shares during the quarter.

Cash and cash equivalents and restricted cash at June 30, 2010 totaled $1.8 million, an increase of $1.2 million from December 31, 2009.

Conference Call and Webcast

ARISE will hold a conference call for analysts and investors at 8:30 a.m. (Eastern) on Wednesday, August 4, 2010. The company will file its financial statements, and Management Discussion and Analysis with SEDAR and these documents will be available on ARISE's website prior to the conference call.

Vern Heinrichs, President and Chief Executive Officer, and Doug McCollam, Chief Financial Officer, will be available to answer questions during the call.

To participate in the call, please dial (647) 427 - 7450 or 1-888 - 231 - 8191 (Canada and the U.S. only) at least five minutes prior to the start of the call. A live audio webcast of the conference call will be available at www.newswire.ca and www.arisetech.com.

An archived recording of the call will be available at 416-849-0833 or 1-800-642-1687 (Canada and the U.S. only) (Pass code: 86713865) from 11:30 a.m. on August 4, to 11:59 p.m. on August 11, 2010. (ET)

About ARISE Technologies

ARISE Technologies Corporation, based in Waterloo, Ontario, is a leader in high-performance, cost-effective solar technology. The company operates through three divisions. The PV Cell Division manufactures PV (photovoltaic) cells at its first manufacturing plant opened in April 2008 in Bischofswerda, Germany. The division is developing proprietary technology with a target of achieving a step-by-step progression to a high-efficiency level of greater than 20%. The PV Silicon Division is using a proprietary method to produce silicon at 7N+ high-purity (99.99999% purity) for PV cell applications, based on a simplified chemical vapor deposition process. The division is focusing on scaling up its process to provide ARISE with control over its supply, costs, and quality. The PV Systems Division has been providing rooftop and ground-mounted PV solutions since 1996. ARISE is planning to expand its systems business in Ontario under the Ontario FIT (Feed-In Tariff) program.

The company's shares are listed on the Toronto Stock Exchange under the symbol APV and on the Frankfurt Open Market Exchange under the symbol A3T. Additional information is available at www.arisetech.com and www.sedar.com.

Forward-Looking Statements and Risk Factors

Certain statements in this news release may be considered to be forward-looking. Such statements are based on management's current expectations, estimations, and assumptions based on experience, trends, and other factors that are subject to the significant risks and uncertainties described in our regulatory filings. Please refer to these. Such risks and uncertainties may include, but are not limited to, the effects of general economic conditions, changing foreign exchange rates, actions by government authorities, the requirement for additional capital, risks associated with manufacturing, industry supply levels, competitive pricing pressures and misjudgements in the course of preparing forward-looking statements.

Risk factors relating to ARISE are discussed in the Risk Factors section of ARISE's Annual Information Form and under the headings Liquidity and Capital Resources and Risk and Uncertainties in ARISE's year-end Management's Discussion and Analysis which are or will be available at www.sedar.com. These factors should be considered carefully, and readers should not place undue reliance on ARISE's forward-looking statements.

ARISE assumes no obligation to update any forward-looking statements or to update the reasons why actual results could differ from those reflected in the forward-looking statements.

    
                       ARISE Technologies Corporation
                     Interim Consolidated Balance Sheets
                                  Unaudited

                                                        As at          As at
                                                      June 30,   December 31,
                                                         2010           2009
                                                -------------- --------------
                                   Assets
    Current assets
      Cash and cash equivalents                 $   1,574,747  $     401,565
      Accounts receivable                           5,727,979      1,788,991
      Inventories                                   5,341,001      9,721,399
      Government assistance receivable                711,571      5,508,171
      Other receivables                             1,848,803        148,297
      Prepaid expenses                              8,775,971      6,615,125
    -------------------------------------------------------------------------
                                                   23,980,072     24,183,548

    Property, plant and equipment, net             51,177,210     56,161,103
    Long term deposits                             21,391,579     24,268,617
    Restricted cash                                   250,420        250,420
    Intangible assets, net                            187,973        163,814
    -------------------------------------------------------------------------
                                                $  96,987,254  $ 105,027,502
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

                                 Liabilities
    Current liabilities
      Bank loans                                $  10,280,108  $  19,594,697
      Accounts payable and accrued liabilities     25,420,956     23,319,955
      Deferred revenue                              7,508,412      5,965,723
      Unearned government assistance                  872,325        872,325
      Current portion of long term debt            13,880,128     17,577,129
      Current portion of capital lease payable        793,769        913,428
    -------------------------------------------------------------------------
                                                   58,755,698     68,243,257
    -------------------------------------------------------------------------
    Long term deferred revenue                      4,100,454      5,556,409
    Long term capital lease payable                 5,448,785      6,321,971
    -------------------------------------------------------------------------
                                                    9,549,239     11,878,380
    -------------------------------------------------------------------------
    Total liabilities                              68,304,937     80,121,637
    -------------------------------------------------------------------------

                             Shareholders' Equity
    Capital stock                                 129,295,313    120,986,619
    Contributed surplus                            16,234,950     10,687,834
    Deficit                                      (116,847,946)  (106,768,588)
    -------------------------------------------------------------------------
                                                   28,682,317     24,905,865
    -------------------------------------------------------------------------
                                                $  96,987,254  $ 105,027,502
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



                       ARISE Technologies Corporation
       Interim Consolidated Statements of Loss and Comprehensive Loss
                                 and Deficit
                                  Unaudited

                      3 months ended June 30,       6 months ended June 30,
                           2010           2009           2010           2009
                  ----------------------------- -----------------------------

    Sales         $  15,301,765  $   6,625,375  $  31,457,997  $  13,844,460
    Cost of goods
     sold            15,841,769      8,458,035     32,380,857     17,021,523
    Valuation
     write-down
     (reversal) of
     inventory
     related
     assets             (65,562)     6,253,714        162,415     15,118,006
    -------------------------------------------------------------------------
    Gross loss         (474,442)    (8,086,374)    (1,085,275)   (18,295,069)
    -------------------------------------------------------------------------

    Expenses
      Research and
       development    1,529,585      2,562,368      2,462,021      4,305,552
      General and
       administrative 4,468,718      2,277,818      6,956,562      4,816,248
      Selling and
       marketing        474,224        402,539        798,296        743,134
      Depreciation and
       amortization     603,137        448,348      1,072,502        898,503
    -------------------------------------------------------------------------
                      7,075,664      5,691,073     11,289,381     10,763,437
    -------------------------------------------------------------------------

    Operating loss   (7,550,106)   (13,777,447)   (12,374,656)   (29,058,506)
    -------------------------------------------------------------------------

    Other expenses
     (income)
      Interest
       expense, net     803,825        582,273      1,450,423      1,174,494
      Foreign
       exchange gain (1,863,635)      (586,314)    (5,570,817)    (1,354,674)
      Loss on
       disposal of
       assets           689,669              -      1,667,490              -
      Other (income)
       expense          240,767       (221,296)       157,606       (566,801)
    -------------------------------------------------------------------------
                       (129,374)      (225,337)    (2,295,298)      (746,981)
    -------------------------------------------------------------------------

    Net loss and
     comprehensive
     loss            (7,420,732)   (13,552,110)   (10,079,358)   (28,311,525)

    Deficit,
     beginning of
     period        (109,427,213)   (80,254,599)  (106,768,588)   (65,495,184)
    -------------------------------------------------------------------------

    Deficit, end
     of period    $(116,847,945) $ (93,806,709) $(116,847,946) $ (93,806,709)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Loss per
     share - basic
     and diluted  $       (0.05) $       (0.11) $       (0.07) $       (0.22)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



                       ARISE Technologies Corporation
                Interim Consolidated Statements of Cash Flows
                                  Unaudited

                      3 months ended June 30,       6 months ended June 30,
                           2010           2009           2010           2009
                  ----------------------------- -----------------------------
    Cash flows
     (used in)
     from
     operating
     activities
      Net loss for
       the period $  (7,420,733) $ (13,552,110) $ (10,079,358) $ (28,311,525)
      Items which
       do not
       involve
       cash:
        Valuation
         write-down
         (reversal) of
         inventory
         related
         assets         (65,562)     6,253,714        162,415     15,118,006
        Unrealized
         foreign
         exchange
         gain        (1,934,522)    (1,179,944)    (6,050,432)    (2,126,330)
        Depreciation
         and
         amortization 1,791,617      1,172,987      3,432,867      2,274,402
        Loss on
         disposal of
         assets         689,669              -      1,667,490              -
        Employee
         stock based
         compensation   857,270        585,149        947,126      1,484,321
        Non-employee
         stock based
         compensation   387,924         52,712        404,706         98,288
        Fair value of
         warrants
         issued         270,000              -        270,000              -
    -------------------------------------------------------------------------
                     (5,424,337)    (6,667,492)    (9,245,186)   (11,462,838)
    Changes in
     non-cash working
     capital items
      (Increase)
       decrease in
       accounts
       receivable    (1,650,414)     4,347,345     (4,720,930)     6,181,471
      Decrease
       (increase) in
       inventories     (557,087)       538,219      3,414,139     (6,604,999)
      Decrease
       (increase) in
       other
       receivables   (1,286,311)       834,279     (1,219,481)        25,499
      Increase in
       prepaid
       expenses      (1,406,338)    (1,104,808)    (1,626,988)    (2,725,163)
      (Decrease)
       increase in
       accounts
       payable and
       accrued
       liabilities    3,116,323      1,597,829      5,371,608     (2,553,826)
      Decrease in
       deferred
       revenue          553,541       (388,293)        35,137     (1,005,077)
    -------------------------------------------------------------------------
                     (6,654,623)      (842,921)    (7,991,701)   (18,144,933)
    -------------------------------------------------------------------------
    Cash flows from
     (used in)
     financing
     activities
      Issuance of
       capital stock
       for cash      12,230,000              -     13,880,000              -
      Share issuance
       costs         (1,032,054)             -     (1,166,980)             -
      Exercise of
       warrants and
       options           18,750              -         18,750              -
      Proceeds of
       loan payable   1,813,203              -      1,813,203              -
      Repayment of
       loan payable  (1,813,203)             -     (1,813,203)             -
      Net proceeds
       (repayment) of
       bank loans    (7,330,228)    (3,076,763)    (7,764,883)     8,665,423
      Net proceeds
       (repayment) of
       long term
       debt          (1,394,528)    (2,708,166)    (1,394,528)     3,306,052
      Repayment of
       capital lease
       payable          (25,145)             -        (51,794)             -
    -------------------------------------------------------------------------
                      2,466,795     (5,784,929)     3,520,565     11,971,475
    -------------------------------------------------------------------------
    Cash flows from
     (used in)
     investing
     activities
      Change in long
       term deposits  1,598,097      1,588,269      2,276,967      3,167,085
      Government
       assistance     4,239,726      4,061,447      4,239,726      3,403,417
      Decrease in
       restricted
       cash                   -        306,370              -      1,258,251
      Purchase of
       intangible
       assets           (19,260)        (6,103)       (50,311)        (8,062)
      Purchase of
       capital
       assets          (167,445)    (3,216,291)      (822,064)   (19,972,903)
    -------------------------------------------------------------------------
                      5,651,118      2,733,692      5,644,318    (12,152,212)
    -------------------------------------------------------------------------
    Net cash inflow
     (outflow)        1,463,290     (3,894,158)     1,173,182    (18,325,670)
    Cash and cash
     equivalents,
     beginning of
     period             111,457      6,687,640        401,565     21,119,152
    -------------------------------------------------------------------------
    Cash and cash
     equivalents,
     end of
     period       $   1,574,747  $   2,793,482  $   1,574,747  $   2,793,482
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Supplemental
     disclosures
     of cash flows:
    Interest and
     stand-by fees
     paid         $     756,539  $     583,945  $   1,403,203  $   1,221,855
    -------------------------------------------------------------------------
    Income taxes
     paid         $           -  $           -  $           -  $           -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

%SEDAR: 00017494E

SOURCE ARISE TECHNOLOGIES CORPORATION

For further information: For further information: ARISE Technologies Corporation, 65 Northland Road, Waterloo, Ontario, Canada, N2V 1Y8, Doug McCollam, Chief Financial Officer, (519) 772-5706, www.arisetech.com; Investor Relations: Glen Williams, The Equicom Group, (416) 815-0700 x272

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ARISE TECHNOLOGIES CORPORATION

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